CLA-2-61:OT:RR:NC:TA:361
Ms. Kay Morrell
JC Penney Purchasing Corporation
6501 Legacy Drive MS 2316
Plano, Texas 75024-3698
RE: Classification and eligibility of a pair of women’s woven shorts with an accompanying belt for preferential treatment under the Bahrain tariff preference level (TPL); General Note 30, HTSUS; 19 CFR 102.21(c)(2); 19 CFR 102.21(c)(4).
Dear Ms. Morrell:
This is in reply to your letter dated January 15, 2010 requesting a classification and TPL status determination for a pair of women’s shorts with a belt.
FACTS:
The submitted sample, style PPK#8301, is a pair of women’s woven shorts constructed from 98 percent cotton and 2 percent spandex woven fabric. The garment features a left over right fly opening with a zipper closure, a flat waistband with a button closure, two front inset pockets, two rear inset pockets, five belt loops and hemmed leg openings. The shorts also features an accompanying cotton braided belt with a D ring which is reinforced at both ends with the same fabric as the shorts. The shorts and belt are composite goods, with the essential character imparted by the shorts, Harmonized Tariff Schedule of the United States (HTSUS), General Rules of Interpretations (GRI) Rule 3, noted.
Chapter 62, note 8 states, in part:
Garments of this chapter designed for left over right closure at the front shall be regarded as men's or boys' garments, and those designed for right over left closure at the front as women's or girls' garments. These provisions do not apply where the cut of the garment clearly indicates that it is designed for one or other of the sexes. As this garment has a left over right closure, the presumption is that the garment will be for men. However, it is clear based on the cut of the garment that it was designed for women. Therefore, the pants will be classified as a woman’s garment.
The shorts and the belt are sold together at retail as a unit. They are adapted to each other, are mutually complementary and together form a whole that would not normally be offered for sale in separate parts. As such, they meet the definition of a composite good found in the Explanatory Notes to the General Rules of Interpretation, 3(b). The essential character of the garment is imparted by the shorts.
Your letter inquiries about three different manufacturing scenarios. The manufacturing operations for the shorts and belts are as follows.
Scenario 1:
CHINA
Fabric for shorts woven
Braided belts manufactured
BAHRAIN
Fabric cut into components
Components assembled into shorts
Belt threaded through belt loops on the shorts
Packaging and shipping to the U.S.
COST
Set: $6.08
Belt: $0.58
Scenario 2:
CHINA
Fabric for shorts woven
Woven fabric pucci belts with D ring manufactured
BAHRAIN
Fabric cut into components
Components assembled into shorts
Belt threaded through belt loops on the shorts
Packaging and shipping to the U.S.
COST
Set: $7.43
Belt: $0.80
Scenario 3:
CHINA
Fabric for shorts woven
Braided fabric for belt manufactured and shipped in rolls
BAHRAIN
Fabric for shorts cut into components
Components assembled into shorts
Braided belt fabric cut to length
Braided belts manufactured
Belt threaded through belt loops on the shorts
Packaging and shipping to the U.S.
COST
Set: $6.08
Belt: $0.58
ISSUE:
What are the classification, country of origin and Bahrain TPL status of the subject merchandise?
CLASSIFICATION:
The applicable subheading for the shorts and belt sets will be 6204.62.4056, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Women’s shorts (other than swimwear): Of cotton: other: other: other: other: women’s shorts. The duty rate will be 16.6% ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/.
COUNTRY OF ORIGIN - LAW AND ANALYSIS: Section 334 of the Uruguay Round Agreements Act (codified at 19 U.S.C. 3592), enacted on December 8, 1994, provided rules of origin for textiles and apparel entered, or withdrawn from warehouse for consumption, on and after July 1, 1996. Section 102.21, Customs Regulations (19 C.F.R. 102.21), published September 5, 1995, in the Federal Register, implements Section 334 (60 FR 46188). Section 334 of the URAA was amended by section 405 of the Trade and Development Act of 2000, enacted on May 18, 2000, and accordingly, section 102.21 was amended (68 Fed. Reg. 8711). Thus, the country of origin of a textile or apparel product shall be determined by the sequential application of the general rules set forth in paragraphs (c)(1) through (5) of Section 102.21.
Paragraph (c)(1) states that "The country of origin of a textile or apparel product is the single country, territory, or insular possession in which the good was wholly obtained or produced." As the subject merchandise is not wholly obtained or produced in a single country, territory or insular possession, paragraph (c)(1) of Section 102.21 is inapplicable. Paragraph (c)(2) states that "Where the country of origin of a textile or apparel product cannot be determined under paragraph (c)(1) of this section, the country of origin of the good is the single country, territory, or insular possession in which each of the foreign materials incorporated in that good underwent an applicable change in tariff classification, and/or met any other requirement, specified for the good in paragraph (e) of this section:"
Paragraph (e) in pertinent part states that "The following rules shall apply for purposes of determining the country of origin of a textile or apparel product under paragraph (c)(2) of this section":
HTSUS Tariff shift and/or other requirements
6201–6208
(1) If the good consists of two or more component parts, a change to an assembled
good of heading 6201 through 6208 from unassembled components, provided that
the change is the result of the good being wholly assembled in a single country,
territory, or insular possession.
The term wholly assembled is defined in 19CFR 102.21(b)(6) as follows:
6) Wholly assembled. The term "wholly assembled" when used with reference to a good means that all components, of which there must be at least two, preexisted in essentially the same condition as found in the finished good and were combined to form the finished good in a single country, territory, or insular possession. Minor attachments and minor embellishments (for example, appliqués, beads, spangles, embroidery, buttons) not appreciably affecting the identity of the good, and minor subassemblies (for example, collars, cuffs, plackets, pockets), will not affect the status of a good as "wholly assembled" in a single country, territory, or insular possession.
Since the instant shorts and belt are considered a composite good and the shorts impart the essential character of the composite good, the country of origin of the shorts will determine the origin for the composite good and the country of origin of the belt will not be determined separately.
Section 102.21(c)(2) is not applicable for scenario 1 and 2, since the merchandise at issue is a composite good which is comprised of shorts that are wholly assembled in Bahrain and a belt which is wholly assembled in China.
Section 102.21(c)(2) is applicable for scenario 3, since the merchandise at issue is a composite good which is comprised of shorts that are wholly assembled in Bahrain and a belt which is wholly assembled in Bahrain.
Section 102.21(c)(3) provides for goods that have been wholly assembled (with certain enumerated exceptions) in a single country, insular possession, or territory, or which are knit to shape. Section 102.21(c)(3) is therefore, inapplicable to the subject merchandise in scenario 1 and 2 as it has not been wholly assembled in a single country, insular possession, or territory, nor is it a knit to shape good.
Where the country of origin of a textile or apparel product cannot be determined under paragraph (c) (1), (2) or (3) of this section, the country of origin of the good is the single country, territory, or insular possession in which the most important assembly or manufacturing process occurred.
In scenario 1 and 2, the country of origin determination is governed by Section 102.21(c)(4). As stated above, since the shorts impart the essential character of the composite good, the most important assembly or manufacturing process involving the shorts will govern the country of origin of the composite good. As it is in Bahrain where the shorts are wholly assembled, the country of origin of the shorts and belt is Bahrain in accordance with Section 102.21(c)(4).
UNITED STATES-BAHRAIN FREE TRADE AGREEMENT:
General Note 30, HTSUS, sets forth the criteria for determining whether a good is originating under the BFTA. General Note 30(b), HTSUS, (19 U.S.C. § 1202) states, in pertinent part, that
For the purposes of this note, subject to the provisions of subdivisions (c), (d), (e), (g) and (h) thereof, a good imported into the United States is eligible for treatment as an originating good of a UBFTA country under the terms of this note only if –
the good is a good wholly the growth, product or manufacture of Bahrain or of the United States, or both;
for goods not covered by subdivision (b)(iii) below, the good is a new or different article of commerce that has been grown, produced or manufactured in the territory of Bahrain or of the United States, or both, and the sum of—
(A) the value of each material produced in the territory of Bahrain or of
the United States, or both, and
(B) the direct costs of processing operations performed in the territory
of Bahrain or of the United States, or both, is not less than 35
percent of the appraised value of the good at the
time the good is entered into the territory of the United States; or
(iii) the good falls in a heading or subheading covered by a provision set forth subdivision (h) of this note and—
(A) each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in such subdivision (h) as a result of production occurring entirely in the territory of Bahrain or of the United States, or both; or
(B) the good otherwise satisfies the requirements specified in such subdivision (h);
and is imported directly into the territory of the United States from the territory of Bahrain and meets all other applicable requirements of this note. For purposes of this note, the term “good” means any merchandise, product, article or material.
General Note 30(b)(i) is not applicable because the fabric is produced in a nonoriginating country.
Insufficient information was supplied to make a determination as to whether General Note 30(b)(ii) is applicable.
General Note 30 sets forth the requirements for eligibility under the United States-Bahrain Free Trade Agreement (UBFTA). General Note 30(b)(iii) states:
the good falls in a heading or subheading covered by a provision set forth subdivision (h) of this note and--
(A) each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in such subdivision (h) as a result of production occurring entirely in the territory of Bahrain or of the United States, or both; or
(B) the good otherwise satisfies the requirements specified in such subdivision (h);
Chapter 62, Chapter rule 3 states in pertinent part:
For purposes of determining whether a good of this chapter is originating, the rule applicable to that good shall only apply to the component that determines the tariff classification of the good and such component must satisfy the tariff requirements set out in the rule for that good.
As the shorts provides the essential character to the shorts and belt sets, only the shorts must undergo the tariff shift requirements.
For goods classified in heading 6204, General Note 30 (h) 62.28 states:
A change to subheadings 6204.61 through 6204.69 from any other chapter, except from headings 5106 through 5113, 5204 through 5212, 5307 through 5308 or 5310 through 5311, chapter 54 or headings 5508 through 5516, 5801 through 5802 or 6001 through 6006, provided that the good is cut or knit to shape, or both, and sewn or otherwise assembled in the territory of Bahrain or of the United States, or both.
General Note 30(b)(iii) is not applicable in all three scenarios as it does not satisfy the requirements of the tariff shift.
The sets in all three scenarios are not eligible for preferential treatment under general note 30.
However, the sets in scenario 1, 2 and 3 may be subject to a reduced rate of duty based upon the Tariff Preference Levels (TPL) established in subheading 9914.99.20 up to the specified annual quantities.
U.S. Note 13(c) of heading 9914 identifies the apparel goods which are subject to the tariff
treatment set forth in subheading 9914.99.20 by subheading and description. The subject
sets fall within the description of U.S. Note 13(c).
Your letter indicates that scenario 2 would not meet the requirements for the reduced rate
under 9914.99.20 because the value of the nonoriginating belt exceeds 10% of the total value
of the set based upon general note 30 (e)(ii). This requirement would also prohibit eligibility
under Bahrain FTA. However, the set would be eligible for duty free status under 9914.99.20
up to the quantity specified in subheading 9914, U.S. Note 13. Headquarters ruling H022665
noted.
HOLDING: For scenarios 1, 2 and 3, the country of origin is Bahrain. These sets are eligible for TPL status up to the quantity specified in subheading 9914, U.S. Note 13 and provided the good is imported directly from Bahrain.
The holding set forth above applies only to the specific factual situation and merchandise identified in the ruling request. This position is clearly set forth in section 19 CFR 177.9(b)(1). This section states that a ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177). Should it be subsequently determined that the information furnished is not complete and does not comply with 19 CFR 177.9(b)(1), the ruling will be subject to modification or revocation. In the event there is a change in the facts previously furnished, this may affect the determination of country of origin. Accordingly, if there is any change in the facts submitted to Customs, it is recommended that a new ruling request be submitted in accordance with 19 CFR 177.2. A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the classification under subheading 6204.62.4056 and the country of origin, contact National Import Specialist Peggy Fitzgerald at (646) 733-3052. If you have any questions regarding the eligibility for preferential treatment and TPL status under Bahrain, contact National Import Specialist Rosemarie Hayward at 646-733-3064.
.
Sincerely,
Robert B. Swierupski
Director
National Commodity Specialist Division